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A closely-watched indicator of economic activity in China is showing an unexpectedly robust reading for September, according to an announcement on Tuesday. But is a real growth rebound underway, following several signs of a slowdown in the third quarter so far?

Hong Kong stock market investors appeared to reserve judgement, allowing the Hang Seng index to slip 0.49 per cent, or 118 points on Tuesday to 23,837. Economists and other survey-based indicators of Chinese economic activity reinforced the skepticism. Continue reading »

Investors interested in India are watching Prime Minister Narendra Modi to see if he will deliver the reforms needed to kick-start the economy.

But India’s economic future is also being determined to a large degree at the state level, according to HSBC, with some states surging forward and others lagging behind. The per capita GDP of Delhi, for instance, is $3,600. In the vast state of Uttar Pradesh, which has a population roughly the size of Brazil’s, it is $690.

That puts Delhi on a par with Ukraine, and Uttar Pradesh with Rwanda. Continue reading »

As beyondbrics noted early this month, the recent “dollar surge” and rising US interest rates are already having an impact on EM currencies. Two weeks later and the effects are becoming more pronounced, as the charts below show.

First, US interest rates. This is the yield on 10-year US Treasury bonds this year.

Source: S&P Capital IQ

 Continue reading »

** FT News **

* Uighur rights activist sentenced to life | Uighur academic given life imprisonment, according to his lawyers, in the harshest verdict since Xi Jinping launched a crackdown on internal dissent

* Raiffeisen Bank hit by Ukraine conflict | Austrian bank’s shares fall as it increases provisions for bad loans by 15%-30%, a month before the European Central Bank publishes the results of its stress tests Continue reading »

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Shoppers in Brazil in front of a watch store

Type “Latin America” and “booming middle classes” into Google and you will get more than 40,000 results. The rise of millions of Latin Americans out of poverty over the past decade has defined the region socially, politically and economically. It has also made investors rich.

However, as Moody’s explains in a report on Tuesday, the middle class-led consumer “boom” is coming to an end and, for some companies in particular, the results won’t be pretty. Continue reading »

Clorox, the cleaning products company, has finally bit the dust in Venezuela, announcing on Monday it was pulling the plug on the embattled Caribbean nation amid the country’s growing economic woes and restrictions.

“This is a very difficult situation for our company,” Don Knauss, chairman and chief executive, said in a statement.

Aside from price controls, foreign companies operating in the country have to deal with runaway inflation, which drives up operating costs. They also have to watch the money they make depreciate because Venezuela’s tight capital controls mean they cannot easily repatriate it. Continue reading »

Unhealthy lifestyles are spreading through emerging market (EM) economies as people adopt fast-food diets, work in stressful and sedentary jobs and contend with worsening pollution. These are unwelcome trends unless, perhaps, you happen to be an investor in EM healthcare stocks.

A proliferation in ailments, rising incomes and growing government support for healthcare in EM countries are bolstering the portfolios of Sectoral Asset Management, a fund company with about $3.5bn under management. In March this year, it publicly launched a fund invested solely in EM healthcare companies. Continue reading »

First the good news: the emerging market growth story is intact. EMs will continue to own a bigger and bigger share of the global economy, delivering attractive though volatile returns for investors. Now the bad news: EMs will never actually emerge. Even as they grow in importance, they will never achieve developed market status.

That is the view of Richard Titherington, head of emerging market equities at JP Morgan Asset Management. Despite what may sound like a gloomy prognosis, he describes himself as an optimist. Most of the problems facing emerging markets are cyclical rather than structural, he says. If the markets work, EMs will continue to pick up relative to DMs. Continue reading »

For decades, a combination of ill health and high rental prices in India’s capital, New Delhi, prevented Ramy Suneja, a fashion design graduate, from setting up her own business. Finally, three years ago, at the age of 60, she started selling her sari designs from home through e-commerce company Snapdeal (one of her creations is pictured left). Today she boasts a turnover of $1m a year.

Throughout India, from dusty one-shop operations to snazzier big brands, retailers are discovering the power of e-commerce. The market is currently tiny: online retail constitutes 0.4 per cent of India’s total retail market, according to Technopak, an Indian consultancy.

But it is growing rapidly as more of India’s 1.3bn population goes online, and its potential is huge. Continue reading »

** FT News **

* China war on graft hits outbound deals | Rare decline in overseas direct investment reverses a decade-long trend of sharp rises

* Blackstone to pull out of Russia | Pressure on western investors after Moscow’s annexation of Crimea and lack of opportunities led US buyout group to ‘give up on Russia’ Continue reading »

By Alastair Campbell and W. John Hoffmann, Exceptional Resources Group

The “rule of law” is set to dominate China’s key Communist Party plenum in October, Xinhua, the official news agency, has said. The rule of law is a “must” if the country is to attain “economic growth, clean government, cultural prosperity, social justice and a sound environment”, Xinhua added.

Many observers would agree. Some may even believe that China is about to embrace a Western-style system in which all actors – the government, institutions, companies and individuals – become subservient to an independent legal code. But what, in practice, is the renewed focus on rule of law likely to mean for China’s development? Continue reading »

Anyone following events in Ecuador will know that Rafael Correa, the fiery president, is not one to avoid confrontation, as journalists, bankers and bondholders, among others, well know.

It seems he has found a new target: fast food, along with other threats to the nation’s health such as alcohol and cigarettes, on which he wants to raise taxes. According to the leftist president, with the proposed levy, “people will stop eating so many McDonald’s and Burger King hamburgers.” The move would also “favour the production of [Ecuadorian] food, our traditional gastronomy.” Continue reading »

By Jorge Rosenblut of Endesa

In the mid 19th century, Horace Greeley urged his countrymen to explore new horizons with his now legendary: “Go west, young man, and grow up with the country.” Though the east was economically vibrant, Greeley saw bold opportunities rising in the west.

Today that “go west” message is promoted by the Pacific Alliance, an economic bloc comprising Mexico, Colombia, Peru and Chile. Their governments – atop solid economies – see the opportunity to grow up with the booming Asia-Pacific region. Continue reading »

As Brazil’s polling day draws closer, another data point emerged on Friday for the voters’ consideration: consumer price inflation is back above the upper limit of the government’s target range and shows no sign of falling back soon.

The IBGE, Brazil’s statistics office, said CPI in the month to mid-September was 0.39 per cent, bringing the accumulated rate over the past 12 months to 6.62 per cent. That was above the consensus forecast of 0.35 per cent for the month, according to Bloomberg. Continue reading »

There is more gloomy news for the world’s second largest economy. A comprehensive official survey of Chinese households, businesses and banks finds demand for loans slackening further in the third quarter, suggesting scant prospects of a reprieve from the credit slump seen in August and July.

Some 3,100 banks interviewed by the People’s Bank of China (PBoC), the central bank, reported a significant easing in loan demand among all three categories of firms – small, medium and large – for the third quarter, which ends at the end of September.

The loan demand index fell to 66.6 per cent, down from 71.5 per cent (see chart). The muted demand for loans is set to create headwinds for the PBoC’s initiative this week to boost economic growth by injecting Rmb500bn ($81bn) into the five largest state-owned banks, economists said. Continue reading »